A fall in prices this week is welcome news following the recent uptick which has seen crude oil rebounding strongly since hitting a 15-month low in March, as fears of a global banking crisis have faded and crude inventories have fallen.The surprise move by nine Opec+ members to voluntarily cut production also helped oil to post its third weekly gain.
Opec+ producers said they would introduce voluntary oil production cuts of 1.16 million barrels per day from May until the end of this year, while Russia said the 500,000 bpd cut it was implementing from March to June would continue until the end of the year. The producers said the precautionary measure was aimed at supporting the stability of the oil market.
The voluntary production cuts by Opec+ members should tighten the oil market further from May onwards and boost prices, according to latest oil report by Swiss lender UBS, which expects crude prices to rally towards the $100 per barrel mark in quarters to come.
Fatih Birol, executive director of the International Energy Agency, on Wednesday also said he expects the global oil market to tighten in the second half of 2023, which would push prices higher.
“Following the shock Opec+ cut announcement on 2 April, crude oil is trading at the highest level this year, trying to now break above its 200-day moving average — last seen in August 2022,” Japanese lender MUFG said in a research note on Thursday.
“It’s a tug-of-war of where oil prices go next. On the one hand is the bullish narrative that supply scarcity driven by a tight market due to stern Opec+ cuts, negligible US shale output and the China reopening trade will drive prices higher.”
The small drop in oil prices on Thursday came despite positive data from China, the world’s largest crude importer.
The country’s oil imports in March surged 22.5 per cent from a year earlier to the highest for a single month since June 2020, as refiners stepped up runs in anticipation of an economic recovery, Reuters reported, citing data from China's General Administration of Customs.
Crude imports in March totalled 52.3 million tonnes, or 12.3 million bpd, compared with 10.1 million bpd of crude imported in March last year, signalling that economic activity in the world’s second-largest economy is picking up pace after the pandemic-driven slowdown last year.
As we head into the third week of April fuel cards users can expect to see a reduction in the region of 1.3 – 1.6 pence per litre depending on card type.
